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NY Times Company plans to utilize new website acquisition - About.com - to diversify its current online advertising through “cost per click” ads and marketing their products to About.com users that are demographic variants to NY Times users.
Full article is below…
The Times Company Acquires About.com for $410 Million
By KATHARINE Q. SEELYE
Published: February 18, 2005
he New York Times Company announced yesterday that it would acquire About Inc. and its Web site, About.com, from Primedia Inc. for $410 million.
Times Company officials said the acquisition would add a fast-growing, highly profitable Web site to the company’s portfolio and would increase the company’s revenue from the expanding online advertising business.
“This deal provides a very attractive return on our investment going forward, and I feel very comfortable standing up in front of shareholders and telling them that,” said Leonard P. Forman, chief financial officer of the Times Company.
By adding About’s 22 million monthly users to the Times Company’s 13 million monthly users - from The New York Times, The Boston Globe and more than 40 other Web sites - the company said it would have the 12th-largest presence on the Internet.
“This scale is important as content companies compete for market share in readership and advertising,” said Martin A. Nisenholtz, named by the Times Company yesterday as senior vice president for digital operations.
About.com uses a network of about 500 experts to write online about hundreds of specialty topics, from personal finance to quilting to fly-fishing. Primedia wanted About.com as a way to provide a link with its many print publications, Web sites, newsletters and video programs.
Kelly P. Conlin, Primedia’s president and chief executive, said that selling About.com would help Primedia reduce its debt and strengthen its own balance sheet.
The Times Company’s acquisition of About.com comes after it was among the losers in a bidding war in the fall for CBS MarketWatch, the financial news Web site. The site was acquired by Dow Jones & Company, publisher of The Wall Street Journal, for $519 million.
Times Company officials said About.com would help diversify its online advertising base by adding “cost per click” advertising, in which advertisers pay only when a reader clicks on an ad.
Cost-per-click ads are the fastest-growing segment of online advertising. The Times Company said it also expected to market its products to About.com users. “The appeal of About is that it gets the NYT Company into the fastest-growing component of the advertising market place, and therefore it makes strategic sense,” said Peter Appert, a media analyst for Goldman Sachs.
“The challenge is that About is very small versus the total scale of the NYT business,” he said, adding that About’s revenues last year were $40 million, a fraction of the Times Company’s revenues. “It represents barely over 1 percent of NYT revenue, so while it’s strategically appealing and it’s a step in the right direction, it’s financially too small to really change the growth story at the NYT,” Mr. Appert added.
Times Company officials said the demographics of About’s users were somewhat different from those of users of The Times’s Web site. The median age of About’s users is 37, which is five or six years younger than that of nytimes.com users. About 65 percent of About users are women, while The Times’s site attracts more men than women. The average income of About users is $61,000 a year, while that of The Times’s online readers is $80,000 a year. And there is little overlap between current About users and The Times’s users.
“It adds a huge new base to our mix,” Mr. Nisenholtz said.
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